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HomeMy WebLinkAbout6 Mello-Roos Workshop Agenda Item # `e TRUCKEE DONNER DistrictPublic Utility Memorandum To: Board of Directors From: Peter Holzmeister Date: January 10, 2003 Subject: Workshop on Mello-Roos 1. Why is this item before the board? This item is a continuation of a discussion we have had on two other occasions. Generally the board has expressed concern about formation of a Mello-Roos District, but there has never been a definitive decision from the board. The board has stated that the discussion is worth having, but there is generally reluctance to proceed with a Mello- Roos District. I am continuing to meet with representatives of East West partners, and Mello-Roos continues to come up. We are close to completing a development agreement for Old Greenwood, and we are working on one for Gray's Station. As we get close to a final development agreement I need to resolve the Mello-Roos issue, This is a decision only the board can make. 2. History East West Partners has asked that we consider forming a Mello-Roos District to provide financing for their two developments, Old Greenwood and Gray's Station. We conducted workshops in September of 2001 and March of 2002 to discuss this request. The board raised the following specific concerns: 1. Does the Mello-Roos debt impact the overall District debt limitation? 2. Who owns and controls the improvements, TDPUD, the Mello-Roos District, or some other entity? 3. What benefit does TDPUD receive? 4. We are too busy right now. 5. Who else is doing Mello-Roos and what can we learn from them? 6. Do the tax bills state that it is TDPUD who is taxing them 7. Will other developers ask us to form an M-R for them? 8. How do we make sure that all the costs of formation and administration are borne by the M-R district? 9. We have always been indifferent to development—neither supporting it nor opposing it. Will our cooperation in formation of an M-R district look like we support the project? It is my understanding that after our last workshop representatives of East West Partners had met individually with all directors, or had at least requested to do so. I understand that the purpose of the meetings was to describe their plans and answer any questions that directors might pose. I think we all understood that directors would not be allowed to express opinions at such meetings about their positions on Mello-Roos, that such opinions would need to be expressed at a board meeting. I am now close to finalizing a development agreement for Old Greenwood, and I am working on a development agreement for Gray's station. It would be helpful if the Mello- Roos issue could be decided one way or the other as part of the development agreement process. 3. New information A. During the past several months we have evaluated our need to construct additional water system infrastructure. That picture has come into clearer focus. We can identify six projects that form an important backbone to our water system going forward: 1) A transmission line from the vicinity of Sanders well to the Fiberboard undercrossing 2) A Transmission line from Northside facility to the Martis Valley 3) The Prosser Flats well 4) The Martis well Number 2 5) The Tahoe Donner transmission pipeline and booster pump station 6) The Bridge Street storage tank number 2 It is possible that a Mello-Roos District could help finance some part of this need B. I spoke with a staff person at Eastern Municipal Water District about their experience with Mello-Roos. Eastern MWD has significant experience with Mello-Roos. I was provided some answers to the list of concerns, at least from their perspective: 1. Does the Mello-Roos debt impact the overall District debt limitation? Mello-Roos debt is not a debt of Eastern MWD. There is no obligation of Eastern MWD to pay the debt if the taxpayers default. However, it is a debt that is included in the overlapping debt calculation when looking at ability to pay. Mello- Roos debt is on an equal pay with tax liens, having priority over other debt. 2. Who owns and controls the improvements, TDPUD, the Mello-Roos District, or some other entity? TDPUD would control the water and electric facilities constructed by the Mello-Roos District. This is accomplished by execution of an agreement that so provides, much like we currently do in the 2 issuance of COPs through the Financing Corporation. Any other improvements that fall under the jurisdiction of other agencies, such as roads or sewers, would, by similar agreement, be controlled by those other agencies. 6. Do the tax bills state that it is TDPUD who is taxing them? Yes. The tax bill also lists the telephone number of the consultant who administers the District. Taxpayers call the consultant who answers the questions, although a small percentage of calls do end up at the District office. 7. Will other developers ask us to form an M-R for them? In Riverside County area all developers of vacant land use Mello-Roos. It is the normal way of developing land 8. How do we make sure that all the costs of formation and administration are borne by the M-R district? Eastern MWD requires an up front deposit of $10,000 to begin the process of Mello-Roos. Administrative costs are built into the financing. 9. We have always been indifferent to development—neither supporting it nor opposing it. Will our cooperation in formation of an M-R district look like we support the project? Eastern takes the position that it does not approve development. That is not their job. Once development is approved Eastern MWD accommodates the approved development by serving it and providing the Mello-Roos tool. 3. Recommendation I think Mello-Roos is probably easy to do from the administrative point of view. It is probably not much of a burden on staff, and what burden there is can most probably be mitigated with compensation. I think there may be a way to design into a Mello-Roos District a benefit to our District. I cannot answer the question of whether our District should provide this kind of assistance to any developer. This is not an issue concerning East-West, or Old Greenwood or Gray's Station. The question is, will Truckee Donner PUD provide Mello- Roos as a tool for a developer; and if so, under what terms and conditions. This is a lot for the board to think about. I have tried to keep the agenda to a minimum so you have time and energy to deal with this. 3