DATE: December 3, 2024
TO: Board of Supervisors
SUBMITTED BY: Paul Nerland, County Administrative Officer
SUBJECT: Policy for Use of Public Financing for Private Development Projects
RECOMMENDED ACTION(S):
TITLE
Consider and take action on changing the County of Fresno Policy for Use of Public Financing for Private Development Projects for the Board of Supervisors to resume consideration of and action on, on a per-project basis, requests from private developers for the County to use land-secured public bond financing for public improvements (also referred to as infrastructure or facilities) relating to proposed residential development projects in the unincorporated area, under the Mello-Roos Community Facilities Act of 1982 (“Mello-Roos Act;” Government Code, section 53311 et seq.), on the condition that Community Services Districts shall be formed, in lieu of using existing or new County Service Areas, to own and operate those public improvements once they are completed.
REPORT
On March 14, 2023, your Board, via minute order, approved changing the County of Fresno Policy for Use of Public Financing for Private Development Projects (Financing Policy) to resume the Board of Supervisors’ consideration of and action on, on a per-project basis, requests from private developers for the County to use land-secured public bond financing for public improvements relating to proposed residential development projects in the unincorporated area, under the Mello-Roos Community Facilities Act of 1982 (Mello-Roos Act); in giving such approval, your Board added a condition that Community Service Districts (CSDs) shall be formed, and directed Staff to return with changes to the Financing Policy adding this CSD condition.
By requiring the condition that CSDs shall be formed, your Board expressed the intention that the separate, resident-governed CSD shall be used, in lieu of using existing or new County Service Areas, to own and operate those public improvements once they are completed.
As discussed below, Staff have since determined that the formation of a CSD at the time a private developer seeks County public bond financing for a residential development project may not accomplish your Board’s express intention of requiring a separate, resident-governed CSD at the outset of the development of the project. This is a policy question that Staff need your Board to resolve.
If your Board wishes to formally approve its action on March 14, 2023, your Board may direct Staff to return to your Board as soon as possible with recommended amendments for that purpose; if so, Staff will provide additional recommended amendments to facilitate such action.
Alternatively, if your Board does not wish to formally approve its action on March 14, 2023, your Board may maintain the status quo prior to such action by minute order - i.e., a motion and vote of your Board.
Since March 14, 2023, the private developer that expressed initial interest in Mello-Roos public bond financing for its proposed residential development project has not further pursued the matter with the County. Nor have any other private developers approached the CAO’s Office requesting the County to consider land-secured public bond financing for their proposed projects in the unincorporated area. This item is Countywide.
ALTERNATIVE ACTION(S):
Staff do not identify any other viable alternative actions at this time.
FISCAL IMPACT:
There is no increase in Net County Cost associated with the recommended action.
DISCUSSION:
The County’s Policy for Use of Public Financing for Private Development Projects (“Financing Policy”) was adopted by the Board of Supervisors in 1993 and revised in 1995, as well as in 1996 to include the Application for Use of Public Financing for a Private Development Projects (“Application”). A copy of the Financing Policy is on file with the Clerk of the Board. The developer’s information provided to the County in the Application is supposed to assist the County in meeting certain disclosure requirements under federal securities laws for the County’s public bond issue relating to the developer’s private development.
On September 23, 1997, the Financing Policy was last changed, via minute order, by the Board of Supervisors to terminate the County’s consideration of using land-secured financing for residential development projects, except for such projects already in the then-current “pipeline.” The Financing Policy, however, continued the County’s consideration of using industrial/ commercial projects.
On February 3, 2023, the County’s Debt Advisory Committee (DAC) held a workshop regarding the County’s ability to resume the County’s use of considering land-secured bond financing, under the Mello-Roos Community Facilities Act of 1982 for proposed residential development projects in the unincorporated area. At the conclusion of the workshop, the DAC recommended in favor of such action.
On March 14, 2023, your Board, via minute order, approved changing the Financing Policy to resume the Board of Supervisors’ consideration of and action on, on a per-project basis, requests from private developers for the County to use land-secured public bond financing for public improvements relating to proposed residential development projects in the unincorporated area, under the Mello-Roos Act; in giving such approval, your Board added a condition that CSDs shall be formed, and directed Staff to return with changes to the Financing Policy adding this CSD condition. By requiring the condition that CSDs shall be formed, your Board expressed the intention that a separate, resident-governed CSD shall be used, in lieu of using existing or new County Service Areas, to own and operate those public improvements once they are completed.
Staff have since determined that the formation of a CSD, at the time a private developer seeks County public bond financing for a residential development project, may not accomplish your Board’s express intention of requiring a separate, resident-governed CSD at the outset of the development of the project. This is a policy question that Staff need your Board to resolve. This is because a CSD must be formed and governed either by registered voters of the CSD or by your Board. For new residential developments, there are usually no or insufficient numbers of registered voters of the proposed territory of a CSD to form a CSD on their own apart from action by the Board of Supervisors.
If your Board serves as the initial board of directors of the CSD, only the registered voters of the CSD, by majority vote, may vote in an election to convert the CSD’s board of directors to their self-governance. The Board of Supervisors may not shift the governance of a CSD to a registered voter-governed board of directors without such voter approval.
A self-governed board of directors of a CSD would consist of five board members, who are registered voters of the CSD, and elected by the registered voters of the CSD.
Staff consulted with County Counsel in preparing this item.
REFERENCE MATERIAL:
BAI #7, March 14, 2023
BAI #5, September 23, 1997
BAI #15, July 16, 1996
ATTACHMENTS INCLUDED AND/OR ON FILE:
On file with Clerk - Financing Policy
CAO ANALYST:
Paige Benavides