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HomeMy WebLinkAbout21 - Disposition of Surplus for AD 71, 78 & 82CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 21 June 23, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis C. Danner, Administrative Services Director (949) 644 -3126 or ddanner @city.newport- beach.ca.us Dan Matusiewicz, Finance Officer (949) 644 -3126 or dmatusie @city.newport- beach.ca.us SUBJECT: Disposition of Surplus Assessment District Improvement Funds for Assessment Districts 71(Balboa Blvd.), 78 (Little Balboa Island) and 82 (Corona del Mar) ISSUE: After the completion of 1913 Act Assessment District improvement projects, the Act requires City Council to take formal action to determine the disposition of surplus improvement fund balances prior to the distribution of said balances. RECOMMENDATION: Adopt Resolution Nos. 2009- , 2009 - and 2009 -, which authorize the City to charge the Assessment Districts interest for funds advanced to it, declares the remaining balance as surplus and provides staff specific direction as to the distribution of improvement fund balances in Assessment Districts 71 (Balboa Blvd.), 78 (Little Balboa Island) and 82 (Corona del Mar). DISCUSSION: Background: The City has participated in the formation of many special assessment districts to finance certain public improvements that provide special benefit to area specific property owners. The vast majority of the City's special assessment districts were formed under the provisions of the California Streets and Highway Code and Municipal Improvement Act of 1913 (The Act), and were utilized to finance the undergrounding of overhead public utilities. Surplus Assessment District Improvement Funds June 23, 2009 Page 2 Upon completion of the improvements and a sufficient period of time has passed where no further improvement related expenditures have occurred (3 or more years after the utility poles have been removed), accounting staff, with the concurrence of public works staff, analyze the projects to determine the amount and extent of remaining improvement funds. At this time, staff has determined that the following surplus improvement funds exist net of accrued interest: Assessment District Surplus 71 (Balboa Blvd.) $131,383 78 (Little Balboa Island) $383,360 82 (Corona del Mar) $45,972 The Act provides that any of the following can be done with surplus improvement funds: 1. All or a portion of the surplus funds can be utilized for the continued maintenance of the improvements. 2. All or a portion of the surplus can be applied as a credit or payment to property owners within the district on a pro rata share of the original confirmed assessment. 3. A portion of the surplus monies can be applied towards a bond call within the assessment district debt. 4. The lesser amount of $1,000 or 5% of the amounts expended from the improvement fund can be transferred to the General Fund of the City. It is our recommendation that City Council direct staff to distribute the remaining improvement fund balances (net of accrued interest) consistent with the Act as follows: 1. Prior to declaring the amount of improvement fund balance as surplus, reimburse the City for foregone interest on funds advanced to the district during the design and formation phase in the same manner the City apportioned interest on Assessment District balances after the district was authorized and funded. 2. After apportioning interest earned and charging the district interest expense, the remaining balance in the improvement fund shall be declared as surplus and be distributed as follows: a. To the current property owners whose assessed property parcel(s) was paid in cash, the proportionate share of the balance shall be paid in cash. Surplus Assessment District Improvement Funds June 23, 2009 Page 3 For the current property owners whose parcel(s) was assessed and financed with bonds, the proportionate share of the balance shall be used to redeem outstanding bonds to the fullest extent possible and with the remnant balance remaining applied as a levy credit to the next assessment installment. Upon approval of the attached resolutions, staff will take the necessary actions to prepare refund checks, notify bond holders, call bonds and prepare a levy credit prior to August 14, 2009, Environmental Review: The City Council's approval of this item does not require an environmental review. Public Notice: This agenda item has been noticed according to the Brown Act (72 hours in advance of the public meeting at which the City Council considers the item). Funding Availability: The bond call, levy credits and /or refunds are solely funded by excess assessment proceeds plus accrued interest. Alternatives: The City Council could additionally elect to transfer the lesser amount of $1,000 or 5% of the amounts expended from the improvement fund to the General Fund of the City, or could elect not to declare a surplus at this time and choose to revisit the item in a reasonable period of time. Prepared by: Submitted by: an Matusiewicz bennis C. Danner Finance Officer Administrative Services Director Attachments: Proposed Resolution 2009-; Assessment District 71 Surplus Proposed Resolution 2009 -_; Assessment District 78 Surplus Proposed Resolution 2009 -1; Assessment District 82 Surplus RESOLUTION NO. 2009- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DIRECTING DISPOSITION OF BALANCE IN IMPROVEMENT FUND WHEREAS, the City Council of the City of Newport Beach has conducted proceedings and completed construction for certain works of improvement in a special assessment district pursuant to the terms and provisions of the "Municipal Improvement Act of 1913 ", being Division 12 of the Streets and Highways Code of the State of California; said special assessment district known and designated as Assessment District No. 71 Balboa Blvd. hereinafter referred to as (the "Assessment District "); and WHEREAS, interest income was allocated to cash balances associated with the Assessment District, interest expense also accrued to the Improvement Fund while the City of Newport Beach advanced funds to the Assessment District during the design phase of the project improvements; and WHEREAS, after completion of the improvements and payment of all the claims from the Improvement Fund for said Assessment District, there remains a surplus in the Improvement Fund which includes apportioned interest income net of interest expenses, and this legislative body is desirous at this time to make the disposition of said surplus as so provided by Section 10427 of the Streets and Highways Code of the State of California. NOW, THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS: SECTION 1. That the above recitals are all true and correct. SECTION 2. That the work of improvement, as set forth and described in the Resolution of Intention for these proceedings, has been completed to the satisfaction of this legislative body, and all payments have either been made or set aside for all existing or potential claims, costs and expenses. SECTION 3. That prior to determining that portion of the amount remaining in the improvement fund, which represents surplus, the City shall reimburse itself for the interest expense accrued on the funds advanced to the Assessment District. SECTION 4. That all surplus monies, at this time remaining in the Improvement Fund, shall be applied as a credit or payment to the property owners within the boundaries of the Assessment District on a pro -rata basis generally determined as follows: A. To those who paid in cash, the proportionate share of the surplus shall be returned in cash to the person or persons currently owning the property for which the assessment or installment has been paid; B. As to the balance remaining after disbursement of the cash payment pursuant to Section 4(A), said balance shall be transferred to the redemption fund and applied as follows: To the fullest extent possible, call bonds in a manner consistent with Section 9 of the bond indenture. 2. The remnant remaining in the redemption fund shall then be applied as a credit to the next succeeding assessment installment for each such parcel. ADOPTED this day of 2009. Mayor ATTEST: City Clerk RESOLUTION NO. 2009- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DIRECTING DISPOSITION OF BALANCE IN IMPROVEMENT FUND WHEREAS, the City Council of the City of Newport Beach has conducted proceedings and completed construction for certain works of improvement in a special assessment district pursuant to the terms and provisions of the "Municipal Improvement Act of 1913 ", being Division 12 of the Streets and Highways Code of the State of California; said special assessment district known and designated as Assessment District No. 78 Little Balboa Island hereinafter referred to as (the "Assessment District'); and WHEREAS, interest income was allocated to cash balances associated with the Assessment District, interest expense also accrued to the Improvement Fund while the City of Newport Beach advanced funds to the Assessment District during the design phase of the project improvements; and WHEREAS, after completion of the improvements and payment of all the claims from the Improvement Fund for said Assessment District, there remains a surplus in the Improvement Fund which includes apportioned interest income net of interest expenses, and this legislative body is desirous at this time to make the disposition of said surplus as so provided by Section 10427 of the Streets and Highways Code of the State of California. NOW, THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS: SECTION 1. That the above recitals are all true and correct. SECTION 2. That the work of improvement, as set forth and described in the Resolution of Intention for these proceedings, has been completed to the satisfaction of this legislative body, and all payments have either been made or set aside for all existing or potential claims, costs and expenses. SECTION 3. That prior to determining that portion of the amount remaining in the improvement fund, which represents surplus, the City shall reimburse itself for the interest expense accrued on the funds advanced to the Assessment District. SECTION 4. That all surplus monies, at this time remaining in the Improvement Fund, shall be applied as a credit or payment to the property owners within the boundaries of the Assessment District on a pro -rata basis generally determined as follows: A. To those who paid in cash, the proportionate share of the surplus shall be returned in cash to the person or persons currently owning the property for which the assessment or installment has been paid; B. As to the balance remaining after disbursement of the cash payment pursuant to Section 4(A), said balance shall be transferred to the redemption fund and applied as follows: To the fullest extent possible, call bonds in a manner consistent with Section 9 of the bond indenture. 2. The remnant remaining in the redemption fund shall then be applied as a credit to the next succeeding assessment installment for each such parcel. ADOPTED this day of 2009. Mayor ATTEST: City Clerk RESOLUTION NO. 2009- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DIRECTING DISPOSITION OF BALANCE IN IMPROVEMENT FUND WHEREAS, the City Council of the City of Newport Beach has conducted proceedings and completed construction for certain works of improvement in a special assessment district pursuant to the terms and provisions of the "Municipal Improvement Act of 1913 ", being Division 12 of the Streets and Highways Code of the State of California; said special assessment district known and designated as Assessment District No. 82 Corona del Mar hereinafter referred to as (the "Assessment District'); and WHEREAS, interest income was allocated to cash balances associated with the Assessment District, interest expense also accrued to the Improvement Fund while the City of Newport Beach advanced funds to the Assessment District during the design phase of the project improvements; and WHEREAS, after completion of the improvements and payment of all the claims from the Improvement Fund for said Assessment District, there remains a surplus in the Improvement Fund which includes apportioned interest income net of interest expenses, and this legislative body is desirous at this time to make the disposition of said surplus as so provided by Section 10427 of the Streets and Highways Code of the State of California. NOW, THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS: SECTION 1. That the above recitals are all true and correct. SECTION 2. That the work of improvement, as set forth and described in the Resolution of Intention for these proceedings, has been completed to the satisfaction of this legislative body, and all payments have either been made or set aside for all existing or potential claims, costs and expenses. SECTION 3. That prior to determining that portion of the amount remaining in the improvement fund, which represents surplus, the City shall reimburse itself for the interest expense accrued on the funds advanced to the Assessment District. SECTION 4. That all surplus monies, at this time remaining in the Improvement Fund, shall be applied as a credit or payment to the property owners within the boundaries of the Assessment District on a pro -rata basis generally determined as follows: A. To those who paid in cash, the proportionate share of the surplus shall be returned in cash to the person or persons currently owning the property for which the assessment or installment has been paid; B. As to the balance remaining after disbursement of the cash payment pursuant to Section 4(A), said balance shall be transferred to the redemption fund and applied as follows: 1. To the fullest extent possible, call bonds in a manner consistent with Section 9 of the bond indenture. 2. The remnant remaining in the redemption fund shall then be applied as a credit to the next succeeding assessment installment for each such parcel. ADOPTED this day of 2009. Mayor ATTEST: City Clerk