The specific plan contains a number of public amenities such as landscaping and lighting on streets, emergency access gateways, and a linear park, that require initial funding and a vehicle to assure ongoing maintenance. The following are a range of approaches and options that could provide the funding necessary.
(Ord. 1944 §§ 1, 2 (Exh. A), 2011)
A. 
Common Interest Development (CID) (Commonly an HOA). A homeowner's association (HOA) is a form of CID, a certain type of real estate and form of home ownership. CIDs allow individual owners the use of common property and facilities and provide for a system of self-governance through an association of the homeowners within the CID. The most common type of association of homeowners is the nonprofit mutual benefit corporation. This is a corporation in which the members of the corporation vote for a board of directors that runs the affairs of the corporation.
B. 
Some of the statutory basis for the operation of CIDs can be found in:
1. 
Civil Code 1350, et seq. (The Davis-Stirling Act);
2. 
Corporations Code 7110-7160 (Nonprofit Mutual Benefit Corporations Formations and Powers);
3. 
Corporations Code 7210-7215 (Corporate Duties and Responsibilities);
4. 
Corporations Code 7220-7225 (Selection, Removal and Resignation of Directors).
(Ord. 1944 §§ 1, 2 (Exh. A) , 2011)
A. 
Assessment Districts.
1. 
Background. In 1978 Californians enacted Proposition 13, which limited the ability of local public agencies to increase property taxes based on a property's assessed value. Since that time, assessment districts, which have been in existence since the early 1900s, have been used on a widespread basis as an alternative method for financing public improvements. Currently, about one in three properties in California is part of an assessment district.
2. 
Authorizing Legislation for Assessment Districts. There are two primary acts which authorize the establishment of assessment districts:
a. 
The Improvement Act of 1911 (Streets & Highways Code § 5000 et seq.), which can be used by cities, counties and other municipal governments to fund a wide range of public infrastructure projects. The 1911 Act can also fund maintenance of improvements.
b. 
The Municipal Improvement Act of 1913 (Streets & Highways Code § 10000 et seq.), which can be used by cities, counties, joint powers authorities and other special districts to fund water, electrical, gas and lighting infrastructure, public transit facilities, as well as other basic infrastructure needs.
c. 
The Improvement Bond Act of 1915 (Streets & Highways Code § 8500 et seq.) is normally used in combination with one of these acts to issue bonds to finance the improvements. The vast majority of assessment district projects are paid for with 1915 Act Improvement Bonds.
3. 
Assessment District Purpose. An assessment district is created to finance improvements when no other source of money is available. Assessment districts are often formed in undeveloped areas and are used to build roads and install water and sewer systems so that new homes or commercial space can be built. Assessment districts may also be used in older areas to finance new public improvements or other additions to the community.
4. 
Assessment District Formation. An assessment district is created by a sponsoring local government agency, such as a city or county. The procedure for forming a district begins with a petition signed by owners of the property who want the public improvement. The proposed district will include all properties that will directly benefit from the improvements to be constructed. A public hearing is held, at which time property owners have the opportunity to protest the assessment district.
5. 
Once approved, property owners have the opportunity to prepay the assessment prior to bond issuance. After this cash payment period is over, a special assessment lien is recorded against each property with an unpaid assessment. Then, these parcels will pay their total assessment through annual installments on the county property tax bill. The property owners will have the right to prepay the remaining balance of the assessment at any time, including applicable prepayment fees.
B. 
Mello-Roos.
1. 
Mello-Roos Bonds. The Mello-Roos (named for its legislative sponsors) Community Facilities District Act of 1982 established another method whereby almost every municipal subdivision of the state may form a special, separate district to finance a long list of public facilities by the sale of bonds and finance certain public services on a pay-as-you-go basis. These community facilities districts are formed and bond issues authorized by a two-thirds vote of the property owners in the district. Typically the only voters in a district are one or more real estate developers who own or have an option on all of the land in the district. These land-based financings were nicknamed "dirt bonds" by the bond advisor years ago. Bonds are sold to finance facilities that can include schools, parks, libraries, public utilities and other forms of infrastructure. The districts may provide public services that include police and fire protection, recreation programs, area maintenance, library services, and flood and storm drainage. Bonded debt service and/or the public services are paid for by special taxes levied on the real property within the district. As the developer subdivides and sells off the land the new property owner assumes the tax burden. Tax delinquencies can lead to fines and penalties and ultimately foreclosure and sale. The ultimate security for Mello-Roos bonds is the value of the real property being taxed, consequently a provision in the law requires the appraised value of the land be three times the bonded debt. Recent foreclosure sales have cast doubts on the skills of the appraisers, and underscore the risk of some of this debt when a severe real estate slump hits developers.
2. 
Background. In 1978 Californians enacted Proposition 13, which limited the ability of local public agencies to increase property taxes based on a property's assessed value. In 1982, the Mello-Roos Community Facilities Act of 1982 (Government Code § 53311-53368.3) was created to provide an alternate method of financing needed improvements and services.
3. 
The Mello-Roos Community Facilities Act of 1982. The Act allows any county, city, special district, school district or joint powers authority to establish a Mello-Roos Community Facilities District (a "CFD") which allows for financing of public improvements and services. The services and improvements that Mello-Roos CFDs can finance include streets, sewer systems and other basic infrastructure, police protection, fire protection, ambulance services, schools, parks, libraries, museums and other cultural facilities. By law, the CFD is also entitled to recover expenses needed to form the CFD and administer the annual special taxes and bonded debt.
4. 
Mello-Roos CFD Purpose. A CFD is created to finance public improvements and services when no other source of money is available. CFDs are normally formed in undeveloped areas and are used to build roads and install water and sewer systems so that new homes or commercial space can be built. CFDs are also used in older areas to finance new schools or other additions to the community.
5. 
Mello-Roos CFD Formation. A CFD is created by a sponsoring local government agency. The proposed district will include all properties that will benefit from the improvements to be constructed or the services to be provided. A CFD cannot be formed without a two-thirds majority vote of residents living within the proposed boundaries. Or, if there are fewer than 12 residents, the vote is instead conducted of current landowners. In many cases, that may be a single owner or developer. Once approved, a special tax lien is placed against each property in the CFD. Property owners then pay a special tax each year. If the project cost is high, municipal bonds will be sold by the CFD to provide the large amount of money initially needed to build the improvements or fund the services.
C. 
Landscaping and Lighting Act District.
1. 
Background. A 1972 Landscaping and Lighting Act allows for the creation of a district used by local government agencies to pay for landscaping, lighting and other improvements and services in public areas. As a form of benefit assessment, it is based on the concept of assessing only those properties that benefit from improvements financed, either directly, or indirectly through increased property values. Because it is considered a benefit assessment, a 1972 Act assessment is not subject to Proposition 13 limitations.
2. 
The Landscaping and Lighting Act of 1972. This legislation (Streets & Highways § 22500) allows local governmental agencies to form Landscape & Lighting Maintenance Districts for the purpose of financing the costs and expenses of landscaping and lighting public areas. This act can be used by any local agency including cities, counties, and special districts such as school districts or water districts. The many approved uses include installation and maintenance of landscaping, statues, fountains, general lighting, traffic lights, recreational and playground courts and equipment, and public restrooms. Additionally, the Act allows acquisition of land for parks and open spaces, plus the construction of community centers, municipal auditoriums or halls to be financed. Notes or bonds can be issued to finance larger improvements under the Act.
3. 
Landscape Lighting District Formation. The sponsoring agency conducts a specific plan, prepares an engineer's report and proposes the formation of a district and the levy of assessments. Affected property owners are then notified and a public hearing is held. In order to approve the district, a majority vote of affected property owners through an assessment balloting procedure is required. Once approved, assessments will be placed on property tax bills each year to pay for the improvements and services.
4. 
Annual Charge. By law (Prop. 13), benefit assessments cannot be based on the value of property. Instead, each district establishes a benefit formula and each parcel in the service area is assessed according to the benefit it receives from the services and improvements.
(Ord. 1944 §§ 1, 2 (Exh. A), 2011)
Government Code Section 65583(a) requires "An analysis of potential and actual governmental constraints upon the maintenance, improvement, or development of housing for all income levels…including…fees and other exactions required of developers, and local processing and permit procedures…"
A. 
Types of Fees and Exactions.
1. 
Housing development is typically subject to two types of fees or exactions: permit processing fees for planning and zoning; and impact fees or exactions, imposed to defray all or a portion of the public costs related to the development project.
2. 
These fees and exactions can impact the cost, and feasibility of housing development and its affordability, and involve issues of private property rights. High planning and site development fees can impact property owners' ability to make improvements or repairs, especially for lower-income households. Development projects are subject to fees and exactions from a growing number of public entities, ranging from special districts to regional agencies. It is important to estimate the cumulative amount of fees housing development will be subject to for development of viable proposals; information about the city or county's fees and exactions is among the most critical. For both processing fees and impact fees, State law specifies procedural and nexus requirements:
a. 
Government Code Section 66020 requires that planning and permit processing fees do not exceed the reasonable cost of providing the service, unless approved by the voters; agencies collecting fees must provide project applicants with a statement of amounts and purposes of all fees at the time of fee imposition or project approval.
b. 
Government Code Section 66000 et seq. (Mitigation Fee Act) sets forth procedural requirements for adopting, and collecting capital facilities fees and exactions, and requires they be supported by a report establishing the relationship between the amount of any capital facilities fee and the use for which it is collected.
B. 
Requisite Analysis.
1. 
Identify and analyze permit processing and planning fees, and development and impact fees and exactions and how they have been established relative to the above statutory requirements, including any in-lieu fees.
2. 
Identify exactions such as land dedication requirements (e.g., streets, public utility and other rights-of-way, easements, parks, open space, etc.) and other exactions imposed on development.
3. 
Include information on how fees are collected, i.e., at the beginning of the approval process, at the time of building permit issuance, or deferred until the project receives certificate of occupancy.
4. 
Identify any policies or efforts to moderate high fee impacts for housing for lower-income households, such as fee waivers, fee deferrals, streamlined fee processing, and consolidated fee schedules.
C. 
Nexus Requirements.
1. 
State law requires establishment of a nexus between the projected development impacts and the public facilities for which impact fees are imposed. Government Code Section 66001(a) of the Mitigation Fee (Act) (Section 66000-66025) requires that any city or county which establishes, imposes, or increases a fee as a condition of development approval do all of the following: (a) identify the purpose of the fee; (b) identify the use to which the fee is to be put; (c) determine how there is a reasonable relationship between the fee's use and the type of development project on which the fee is imposed; and (d) determine how there is a reasonable relationship between the need for the public facility and the type of development project upon which the fee is imposed.
2. 
Government Code Section 66001(b) further requires the locality to determine whether there is a reasonable relationship between the specific amount the fee imposed and the costs of building, expanding, or upgrading public facilities. Such determinations, also known as nexus studies, are made in written form and must be updated whenever new fees are imposed or existing fees are increased.
3. 
The Act also requires jurisdictions to segregate fee revenues from other municipal funds and to refund them if they are not spent within 5 years. Any person may request an audit to determine whether any fee or charge levied by the city or county exceeds the amount reasonably necessary to cover the cost of the service provided (Government Code Section 66006(d)). Under Government Code Section 66014, fees charged for zoning changes, use permits, building permits, and similar processing fees are subject to the same nexus requirements as development fees. Lastly, under Government Code Section 66020, agencies collecting fees must provide project applicants with a statement of the amounts and purposes of all fees at the time of fee imposition or project approval.
(Ord. 1944 §§ 1, 2 (Exh. A), 2011)
A. 
General Obligation Bonds.
1. 
Definition. "General obligation bonds" are a form of long-term borrowing in which the state issues municipal securities and pledges its full faith and credit to their repayment. Bonds are repaid over many years through semiannual debt service payments. The California Constitution requires that GO bonds be approved by a majority vote of the public and sets repayment of GO debt before all other obligations of the state except those for K-14 education.
2. 
Key Statutory Authorities.
a. 
Article XVI, Section 1, of the California Constitution prohibits the Legislature from creating debt or liability which exceeds $300,000 without a majority vote by the people, except in case of war.
b. 
Government Code, Title 2, Division 4, Part 3 (Section 16650 et seq.) sets out the statutory framework for GO bonds. Statutory authorization for individual GO bond measures is placed programmatically in the codes (e.g., prison authorizations are located in the Penal Code).
B. 
Certificates of Participation (COPs). A form of lease revenue bond that permits the investor to participate in a stream of lease payments, installment payments or loan payments relating to the acquisition or construction of specific equipment, land or facilities. In theory the certificate holder could foreclose on the equipment or facility financed in the event of default, but so far no investor has ended up owning a piece of a school house or a storm drainage system. A very popular financing device in California since Proposition 13 because COP issuance does not require voter approval. COPs are not viewed legally as "debt" because payment is tied to an annual appropriation by the government body. As a result, COPs are seen by investors as providing weaker security and often carry ratings that are a notch or two below an agency's general obligation rating.
(Ord. 1944 §§ 1, 2 (Exh. A), 2011)