Discussion and possible action to adopt RES. 2020-64 approving and authorizing the execution of the Amended and Restated Vistancia Community Facilities District Development, Financing Participation, and Intergovernmental Agreement and declaring an emergency.

The City of Peoria is a party to the Vistancia Community Facilities District (CFD) Development Agreement and as such City Council approval is required for any amendment to the Vistancia CFD Development Agreement (the proposed Amended and Restated Development Agreement is attached).

The Vistancia CFD Development Agreement is being amended to allow for the following:

1. Refunding of the outstanding series 2015 bonds and issuance of additional bonds of up to approximately $2 million to fund improvements constructed by the developer that benefit the district. The refunding and new bond transaction will not extend the maturity of the current outstanding 2015 bonds and will not increase the current $2.10 target tax rate.

2. Replacing existing developers, guarantors and indemnitors (Vistancia Land Holdings LLC, Shea Homes LP and SLFIII-Vistancia LLC) with the new developer, guarantors and indemnitors (Vistancia Master Holdings LLC and Vistancia Residential LLC) as the new parties to the Development Agreement,

3. Adding new conditions, terms and requirements including requirements for the developer to provide a Letter of Credit Indemnity Deposit of $1.5 million for the first year and $1.0 million thereafter.

The Amended and Restated Development Agreement will be presented to the Vistancia CFD Board for approval on September 8, 2020, along with a resolution for the sales of refunding bonds. 

The attached Resolution represents City Council's approval and authorization of the Amended and Restated Development Agreement.

The Vistancia CFD was formed by the City Council in 2002 with "voter authorization" to issue up to $100 million in bonds to finance public water and wastewater infrastructure projects. To date $67.6 million of debt has issued through three bond transactions (series 2002, 2005, and 2006).

A target tax rate of $2.10 per $100 of assessed value was established for the repayment of debt, with the developer making annual contributions for any shortfall in tax collections to pay debt service. The developer is obligated to make such contributions via a Standby Contribution Agreement (SCA) that is secured by a letter or credit and surety bond.

In 2015, the series 2002, 2005 and 2006 bonds were refunded (refinanced) to generate debt service savings of approximately $1.1 million  per year. The refunding allowed the developers to reduce their annual shortfall contributions by approximately $1.1 million. The $2.10 target tax rate has remained unchanged since inception in 2002.

In FY2019/20, the developers SLFIII - Vistancia LLC (Stratford) sold their interest in the development to new developers Vistancia Master Holdings LLC and Vistancia Residential LLC.

Vistancia Master Holdings LLC, an Arizona limited liability company, whose investors and managing members include Andrew Klein and Scarborough Lane Development, is the sole member and manager of Vistancia Residential LLC.

A. Adopt the attached Resolution approving the Amended and Restated Vistancia Community Facilities District Development, Financing Participation, and Intergovernmental Agreement and declaring and emergency.

B. Do not adopt the attached Resolution approving the Amended and Restated Vistancia Community Facilities District Development, Financing Participation, and Intergovernmental Agreement and declaring and emergency.

Separate Legal Entity

The Vistancia CFD is a separate legal entity within the boundaries of the City.  As such, any debt or other legal obligations of the CFD are strictly obligations of the CFD. They are not obligations of the City of Peoria. The financial obligations primarily include the debt service payments necessary to meet semi-annual principal and interest payments.

New Developer Entity and Indemnity Deposit

The new developer, guarantors and indemnitors of the CFD are single purpose limited liability companies created by the investors and managing members for the sole purpose of developing the Vistancia project.  The ability of these entities to fully indemnify the CFD and City against claims and losses may be limited, creating risks for the CFD and City. To mitigate  such risks, the developer is required to provide a letter of credit deposit of $1.5 million. The deposit will automatically be reduced to $1.0 million in the second year and will remain in place until all debt is paid off and the CFD is inactive for five consecutive years. The CFD has the authority to assess an operation and maintenance tax of up to $0.30 per $100 of assessed valuation for expenses but has not assessed this tax since inception and does not plan to do so. 

Target Tax Rate of $2.10 Not Maximum Rate

The debt service obligations of the CFD are the ultimate responsibility of the property owners within the CFD. They are not obligations of the City of Peoria.  The CFD is legally obligated to establish the property tax rate at whatever tax rate is necessary to generate property tax revenues necessary to meet the debt service in any given year. The targeted $2.10 tax rate is not a maximum rate. As discussed above, the developer is required to make shortfall contributions under a Standby Contribution Agreement (SCA). If the developer fails to make the required contributions, the CFD can draw upon the security for the SCA and the letter of credit deposit for indemnity.