Summary:
The Mayor and Council of the City have adopted resolutions ordering and declaring the formation of the District, tax levying public improvement district for purposes of Arizona law.
Upon formation of the District, the District Board of each District must take administrative action to effectuate certain proceedings taken by the City Council.
This resolution provides for taking certain actions with regard to organization of the Saddleback Community Facilities District No. 2; approving the general plans for the applicable District; approving and authorizing the execution and delivery of District Development, Financing Participation and Intergovernmental Agreements (the “CFD Agreement”) for the applicable District; and ordering and calling an election in the District with respect to issuance of bonds by the District and the levy of an ad valorem property tax therefor and to the levy of a separate ad valorem property tax attributable to the operation and maintenance expenses of the District.
Upon adoption of this resolution, the District Board will:
· Appoint Chairperson and Vice Chairperson of the District Board and District Clerk, District Treasurer, District Manager, District Chief Financial Officer and District Counsel;
· Ratify notification of where notices of meetings will be posted;
· Approve the General Plan of the District; and
· Approve the CFD Agreement for the District and execution and delivery thereof.
Additionally, the resolution orders an election to be held for the District on September 9, 2025, with respect to the issuance of bonds by the District and the levy of an ad valorem property tax for both debt service and operations and maintenance expenses of each District. The bond election for each District would authorize a total of $300,000,000 in bonds for the Districts ($35,000,000 for District No. 1, $75,000,000 for District No. 2, $70,000,000 for District No. 3, $75,000,000 for District No. 4 and $45,000,000 for District No. 5).
After the election, the District Board will hold a meeting within 14 days to canvass the results of the election.
The CFD Agreement for each District includes a target secondary tax rate of $2.65 per $100 of limited assessed valuation. The actual rate for payment of debt service on bonds could go higher, if for some reason the total assessed valuation within a District falls or some other unforeseen event makes it necessary to raise the tax rate to cover the bond obligations, though staff will continue to recommend issuance of bonds conservatively in an effort to avoid such result. To address such contingency, the CFD Agreement for each District includes a requirement that the developer counterparty (the “Developer”) to the CFD Agreements execute a Standby Contribution Agreement in connection with each bond issuance pursuant to which the Developer will be required to contribute amounts for payment of debt service if collections generated by the target secondary tax rate of $2.65 per $100 of limited assessed valuation are not sufficient for payment of debt service on bonds. Such obligation will be further supported by a cash deposit or letter of credit provided by the Developer that can be accessed in the event the Developer does not make a payment pursuant to the Standby Contribution Agreement.
The CFD Agreement for each District provides for the levy of a $0.30 per $100 of limited assessed valuation operation and maintenance tax under certain circumstances. Notwithstanding the foregoing, under no circumstances will the target tax rate exceed $2.65 per $100 of limited assessed valuation. It is not expected that the operation and maintenance tax will be levied by any of the Districts in the near term.
The financial obligations of the Developer under the CFD Agreements include: (a) five separate letters of credit in the amount of $350,000, with limited release provisions, the purpose of which is to collateralize the Developer’s obligations to the Districts to provide for indemnification and payment of expenses of the Districts; (b) five separate deposits of $50,000 with the Districts, due upon formation, to cover initial costs of the CFD which is to be replenished to $25,000 when such deposits are expended. The letter of credit for District No. 1 will be provided within 60 days of formation of District No. 1. The letter of credit for Districts No. 2-5 will be provided upon the earlier of (i) the date of submission by the Developer (or a related entity) to the City of a preliminary plat application with respect to any of the property within the applicable District, or (ii) the date of submission by the Developer (or a related entity) to the City of a grading at owner’s risk permit application with respect to any of the property within the applicable District.