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Home My WebLink About18 - Transfer of Excess Bonita Canyon Bond FundsTO: CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 18 April 13, 2010 HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Tracy McCraner, Administrative Services Director (949) 644 -3123 or tmccraneronewportbeachca.gov Dan Matusiewicz, Acting Deputy Administrative Services Director (949) 644 -3126 or danmC�newportbeachca.gov SUBJECT: TRANSFER OF EXCESS BONITA CANYON BOND FUNDS ISSUES: Should the City appropriate $100,000 of excess Bonita Canyon bond funds for remaining improvements at Bonita Canyon Sports Park? Additionally, should the City Council authorize a transfer of the residual $1,031,884 excess Bonita Canyon bond funds from the City improvement account to the Newport-Mesa Unified School District's ( NMUSD) related improvement account? RECOMMENDATION: Approve Budget Amendment #BA- appropriating $100,000 in the Bonita Canyon fund for remaining improvements at Bonita Canyon Sports Park and authorize the transfer of the residual excess Bonita Canyon Bond funds ($1,031,884) from the City improvement account to the NMUSD improvement account. DISCUSSION: In order to finance certain public improvements associated with the Bonita Canyon development, a joint powers authority (JPA) and a Community Facilities District (CFD) was established in 1998. The JPA consisting of the City and NMUSD subsequently issued bonds which were secured by property within the Bonita Canyon CFD boundaries. The bond proceeds were divided into a City improvement account and a School District improvement account. As specified by the bond indenture, the City's improvement proceeds can only be used for very specific purposes which included: Transfer of Excess Bonita Canyon Funds April 13, 2010 Page 2 the acquisition of certain parcels of land; the construction of certain street improvements; and, the development of an active use park (Bonita Canyon Sports Park). As of February 28, 2010, the City improvement account had a balance of $1,131,884, which was derived from a transfer of investment earnings on the Reserve Fund's balance. On November 5, 2009, the City received a written request from the School District asking that a portion of the City's improvement account surplus be transferred to the School District improvement account for the construction of expanded parking at Corona del Mar High School (and other related costs). While considering the NMUSD request, staff explored additional City uses of the excess bond proceeds. The City plans to retain a nominal portion of the remaining proceeds ($100,000) to complete incidental improvements at Bonita Canyon Sports Park that reasonably fall within existing project definition including improvements to shade structures, backstops, safety surfacing at tot lots and the implementation of plant and tree in -fills throughout the park. Council directed staff to explore the possibility of substantial additional park improvements. In consultation with bond counsel, the Office of the City Attorney and Mayor Curry, we confirmed that the City does not have the ability to embark on substantial new project uses since the City already completed the land acquisition and improvements as contemplated by the bond indenture's current project definition. However, eligible uses of the School District improvement account are defined more broadly to include any improvements that would increase the capacity to serve students residing within the Bonita Canyon CFD boundaries including new construction, modernization and other improvements to Newport Coast Elementary School or Corona del Mar High School. Having contemplated the possibility of surplus improvement fund balances, the bond indenture specifically allows the City to transfer excess funds in the City's improvement account to the School District improvement account. Pending the approval of the budget amendment, the City would transfer a portion of the surplus funds, determined by the City, to the School District improvement account for this project. After considering the $100,000 of remaining incidental improvements, the residual surplus funds that can be transferred from the City improvement account to the School improvement account total $1,031,884. i i Environmental Review: Transfer of Excess Bonita Canyon Funds April 13, 2010 Page 3 The City Council's approval of this agenda item does not require environmental review. Public Notice: This agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Funding Availability: Funding is available in the City improvement fund held by the bond trustee. Alternatives: The City could choose to reduce the outstanding bonds secured by the property within the CFD or seek an amendment to the City's project definition that would require the consent and approval by NMUSD. Prepared by: n Matusiewicz Acting Deputy Administrative Services Director Attachments: Letter from NMUSD Budget Amendment Submitted by: Tracy McC ner Administrative Services Director s NEWPORT -MESA Unified School District 2985 -A Bear Street . Costa Mesa • California 92626 . (714) 424 -5000 BOARD OF TRUSTEES Dana Black . Dave Brooks • Michael Collier Walt Davenport • Martha Fluor • Judy Franco • Karen Yelsey Jeffrey C. Hubbard, Ed. D., Superintendent Mailing; Address: P.O. Box 13368 Newpnrl Beach, CA 92663.1,W November 5, 2009 Dennis Danner City of Newport Beach 3300 Newport Blvd. Newport Beach, CA 92663 Dear Dennis, At recent meetings of the governing board of CFD 98 -1, our joint powers arrangement between the City of Newport Beach and the Newport-Mesa Unified School District, we discussed the fact that there is approximately one million dollars in the City's portion of the CFD 98 -1 Improvement Fund. Unfortunately, the permitted projects for CFD 98 -1 are tightly limited within the legal documents. What is available, of course, is a transfer to the school district for "school improvement purposes" to benefit CFD 98 -1. We have previously used this mechanism to fund the improvement known as the "Loop Road" at Newport Coast Elementary School. We'd like to propose another project which we believe will benefit CFD 98 -1 and the general Newport community. Students in grades 7 -12 from CFD 98 -1 attend Corona del Mar High School. As both our entities recognize, parking at Corona del Mar High School is quite limited. Consequently, we would ask that the monies determined by you to be currently available in the City's portion of the CFD 98 -1 Improvement Fund be transferred to the District's portion of the CFD 98 -1 Improvement Fund for the purpose of expanding parking at Corona del Mar High School. I believe when we first talked of this last Spring that then City Manager Homer Bludau indicated that the amount beyond $100,000 could be made available. On October 27, 2009, the Board of Education approved the Long Range Facilities Master Plan for Corona del Mar High School which included an expansion of parking which is to be accomplished by relocating three tennis courts. The immediate increase in parking will be the creation of 121 stalls to the main lot along Eastbluff Drive. The net increase, however, will be partially reduced in the next few years as new facilities are built near the other lots. Nonetheless, the net increase will remain at approximately 80 stalls. Please see the attached graphic representation. The total cost of the project, though design is not complete, is anticipated to be in the neighborhood of $1.3 Million, with the funding for the balance beyond what can be identified from CFD 98 -1 coming from district sources. We would, if at all possible, like to proceed with this project during the summer of 2010. If you have any questions, please do not hesitate to give me a call at 714 424 -5002. Sincerely, Paul H. Reed Deputy Superintendent and Chief Business Official cc: Dr. Jeffrey Hubbard, Superintendent � h � •C J Ln Ln to 'K i W L Q MOD �+ .% U N ^ d O O C `c L. i. C t �C4i Lo o �� O U M i r' r ' f� ✓ `� n/ G ✓ I�X WT �.. -� i ... Ia- i O ao .4 . City of Newport Beach NO. BA- 10BA -033 BUDGET AMENDMENT 2009 -10 AMOUNT: $1,131,884.16 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates Increase in Budgetary Fund Balance �X Increase Expenditure Appropriations AND X Decrease in Budgetary Fund Balance Transfer Budget Appropriations No effect on Budgetary Fund Balance SOURCE: from existing budget appropriations from additional estimated revenues NX from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To increase expenditure appropriations for improvements to be made to Bonita Canyon Sports Park and to transfer the remaining excess Bonita Canyon bond funds from the City improvement account to the Newport Mesa Unified School District (NMUSD) improvement account. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Amount Fund Account Description Debit Credit 440 3605 Bonita Canyon - Fund Balance $1,131,884.16 REVENUE ESTIMATES (3601) Fund /Division Account Description EXPENDITURE APPROPRIATIONS (3603) Description Division Number 7441 Bonita Canyon Development Fund Account Number C5100758 Transferto NMUSD $1,031,884.16 Division Number 7441 Bonita Canyon Development Fund Account Number C4120616 Bonita Canyon Sports Park $100,000.00 Division Number Account Number Division Number Account Number, • Automatic System Entry. Signed: ( e vz• /1D �D Fina`nc�ial proval: Administrative Services Director Date G`' J Signed: Adm— inis r -alive AppngaalManager Date Signed: City Council Approval: City Clerk Date