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HomeMy WebLinkAbout10 - Declaration of Surplus Fund Balance in Assessment District 100CTY OF F NEWPORT BEACH City Council Staff Report June 23, 2015 Agenda Item No. 10 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dan Matusiewicz, Finance Director — (949) 644 -3123, dmatusiewicz @newportbeachca.gov PREPARED BY: Cory Pearson, Accountant PHONE: (949) 644 -3243 TITLE: Declaration of Surplus Fund Balance in Assessment District 100 ABSTRACT: Upon completion of Assessment District improvement projects, City Council is required to take formal action to declare the remaining improvement balances as surplus. Upon approval of the attached resolution, staff will be directed to take the necessary actions to disburse surplus balances associated with Assessment District 100 in accordance with the California Streets and Highway Code and Municipal Improvement Act of 1913. RECOMMENDATION: Adopt Resolution No. 2015 -59, A Resolution of the City Council of the City of Newport Beach, California, Directing Disposition of Balance in the Improvement Fund of Assessment District No. 100, authorizing the City to declare the remaining improvement fund balance as surplus and provide staff direction as to the distribution of improvement fund balances in Assessment District 100 (13th St. /Balboa Blvd. /Adams St. /Ocean Front). FUNDING REQUIREMENTS: The bond call, levy credits and /or refunds are solely funded by excess assessment proceeds plus accrued interest. DISCUSSION: Background The City has participated in the formation of numerous special assessment districts to finance public improvements that provide a special benefit to area - specific property owners. Special Assessment District 100, which consists of approximately 19.8 acres bordered by 13th Street, Balboa Boulevard, Adams Street, and Ocean Front was created to finance the undergrounding of overhead public utilities and was formed under the provisions of the California Streets and Highway Code and Municipal Improvement Act of 1913 (the "1913 Act) with bonds issued pursuant to the Improvement Bond Act of 1915 (the "1915 Bond Act'). 10 -1 Upon creation of Assessment District 100, the City established an Improvement Fund to account for project construction expenses. The monies in this fund are derived from bond proceeds, investment earnings and prepaid assessments collected from parcel owners. Disposition of Surplus Improvement Funds The improvements related to Assessment District 100 have been completed and a sufficient period of time has passed without occurrence of further construction related expenditures. Since no further construction is expected, staff analyzed the project to determine the amount of project improvement funds remaining. At this time, staff has determined that the following surplus improvement funds exist including accrued interest: Assessment Total District Improvement Fund Surplus 100 $528,105 Disposition of Surplus Direct Refunds Bond Redemption $218,050 $310,055 It is our recommendation that City Council direct staff to distribute the remaining improvement fund balance consistent with the 1913 Act as follows: 1. To the current property owners whose assessed property parcel(s), which were paid in cash. In addition, the proportionate share of the construction balance shall be paid in cash. 2. For the current property owners whose parcel(s), which were assessed and financed with bonds, the proportionate share of the construction balance shall be used to redeem outstanding bonds to the fullest extent possible with the remnant balance remaining applied as a levy credit to the next assessment installment. Upon approval of the attached surplus declaration resolution, staff will take the necessary actions to prepare refund checks, notify bond holders, call bonds and if applicable, prepare a levy credit prior to the August levy deadline and the September 2, 2015 installment date. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The 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). ATTACHMENTS: Description Attachment A - Directing Disposition of Balance in District 100 10 -2 ATTACHMENT A Resolution 2014 -_ Directing Disposition of Balance in District 100 10 -3 RESOLUTION NO. 2015- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH DIRECTING DISPOSITION OF BALANCE IN THE IMPROVEMENT FUND OF ASSESSMENT DISTRICT NO. 100 WHEREAS, the City Council of the City of Newport Beach has conducted proceedings and completed construction for certain works of improvement in a certain 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 is respectively known and designated as Assessment District No. 100 ( "Assessment District'); WHEREAS, interest income was allocated to the cash balance 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 of the Assessment District that 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, the City Council of the City of Newport Beach resolves as follows: Section 1: That the work of improvement, as set forth and described in the Resolution of Intentions for these proceedings, has been substantially 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 2: That prior to determining that portion of the amount remaining in the Improvement Funds, which represents surplus, the City shall reimburse itself for the interest expense accrued on the funds advanced to each Assessment District. Section 3: That surplus monies, in the Improvement Fund (in the amount of $528,105 for Assessment District No. 100), shall be applied as a credit or payment to the property owners within the boundaries of the Assessment District to which such Improvement Fund relates 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; 10 -4 B. As to the balance remaining after disbursement of the cash payment pursuant to Section 3(A), said balance shall be transferred to the redemption fund and applied to call bonds in a manner consistent with the bond indentures for such Assessment Districts. Section 4: The recitals provided in this resolution are true and correct and are hereby incorporated into the substantive portion of this resolution. Section 5: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting this resolution. ADOPTED this 23th day of June, 2015. ATTEST: Leilani I. Brown City Clerk Edward D. Selich Mayor 2 10 -5