Eastern Municipal Water District
California

Action/Info Item
3771
Received and Filed
Feb 20, 2019 9:00 AM

Fourth Quarter Report on Activities Related to Program Management of Community Facilities Districts and Assessment Districts

Information

Department:FinanceSponsors:
Category:Action/Info ItemMeeting Workflows:Board Admin Committee Workflow

Background

In the fourth quarter of Calendar Year 2018, Eastern Municipal Water District (EMWD) was responsible for Program Administration of seven Assessment Districts (ADs), and 57 Community Facilities Districts (CFDs), which include 102 separate financing areas; i.e., Improvement Areas (IAs) or Tax Zones, as detailed in the Quarterly CFD Program Management Report (Exhibit A) and Quarterly Status Report (Exhibit B).

 

CFD Formation:

 

The Financing team completed the formation of CFD No. 2018-80 (Adobe Springs) in the fourth quarter.  We continue to evaluate the applications to form CFD No. 2017-79 (French Valley South), CFD No. 2018-81 (Cimarron Ridge), and CFD No. 2018-82 (The Woods).  The team is waiting on additional information regarding these projects from the developers before the Resolutions of Intention are scheduled.  We have also received an application to form CFD No. 2019-83 (Winchester Ridge) from Developer D. R. Horton.  This application is currently under evaluation.  This project will include 377 units and is located in unincorporated Riverside County, east of the City of Menifee, south of Domenigoni Parkway and west of Leon Road.  Pending and upcoming CFD activity is listed in the Action Item Summary (Exhibit C).  The location of each current, new and proposed CFD formation and bond sale is illustrated on the attached location maps (Exhibit D).

 

Bond Sale:

 

The parity bond issuance for CFD No. 2005-43 IA B (Kona Road/Holiday) was completed in the fourth quarter, which is projected to save property owners, on average, $132 per year.  In addition, the District has commenced proceedings for a bond sale within CFD No. 2014-67 IA A.  This is a new money parity issuance, and financing documents will go before the Board for approval on February 20, 2019.  This project is owned by Lennar Homes, and it meets all of the land secured guidelines outlined in the Comprehensive Debt Policy.  EMWD has also been levying the CFD for two years, and it maintains a low delinquency rate as shown in the Delinquency Summary Report (Exhibit E).  Lennar Homes has also requested a new money issuance for CFD No. 2013-64 (Atherton and Terracina).  Review of this request is in progress, and this item is currently scheduled to go before the Board on March 20, 2019.

 

Change Proceedings:

 

During the fourth quarter, the EMWD Program Management team received a petition to annex an additional 38 lots owned by LCTH Investment LP into CFD No. 2003-25 IA C (Pacific Communities).  This annexation would serve to lower the special taxes in future years on the existing home owners.  This Change Proceeding is schedule for a Public Hearing before the Board on February 6, 2019.  We also received a petition from landowner JVRL 220, LLC to amend the facilities authorized to be reimbursed for CFD No. 2017-77 (La Ventana) IA A and IA B to include school improvements.  A Joint Community Facilities Agreement between EMWD, Perris Union High School District, and JVRL 220, LLC will serve to facilitate the financing of school improvements through the CFD.  The amount of the Special Taxes within the CFD will not be affected by this amendment.  This Change Proceeding is also scheduled for a Public Hearing before the Board on February 6, 2019.  For CFD No. 2012-61 (Autumn Winds), KB Homes has requested a change proceeding to increase the Special Tax rates and extend the tax term, as well as to add a JCFA with Valley-wide Recreation and Parks District (Valley-wide).  The team has received an application from Regent French Valley, LLC, the developer, for CFD No. 2013-63 IAs B, C, and D (Belle Terre), requesting an amendment to the special tax rates.  An application was also received for CFD No. 2006-51 (Nuevo Meadows) to amend the RMA to increase the Special Tax rates, extend the term of the tax, and enter into a Joint Agreement with Nuview Union School District.  The team also received one preliminary change proceeding request to amend the RMA for CFD No. 2013-62 (Eucalyptus Grove/McLaughlin South).  Lansing Stone Star, LLC, the developer, is seeking to remove Zone 1 from the EMWD CFD, and form a new CFD with Romoland School District as the lead agency.  The developer is requesting EMWD enter into a JCFA with the new proposed Romoland School District CFD.  They would also like to increase the Special Tax rates in Zone 2.  All requested change proceedings would comply with the Special Funding Land Secured Guidelines as incorporated in the District’s Comprehensive Debt Policy.

 

Joint Community Facilities Agreements:

 

The Financing team completed JCFAs with Moreno Valley USD CFD No. 2015-2 and Moreno Valley USD CFD No. 2016-1 during the fourth quarter.  In addition, the proposed JCFAs with Moreno Valley USD CFD No. 2019-1 and Moreno Valley USD CFD No. 2015‐3 were in progress during the fourth quarter.  The proposed JCFA with Moreno Valley USD CFD No. 2018-1 is still under evaluation, and the team is currently awaiting additional information from the developer.  The District reviews each JCFA against our land secured guidelines to ensure it is within the two percent effective tax rate at formation.  Each agency forming a JCFA with EMWD must also covenant that they will not place EMWD’s name on the property tax bills referencing a CFD where EMWD is not the lead agency.

 

Administration and Consulting:

 

During the fourth quarter, the team completed the required CDIAC filings for each CFD and Marks Roos Pooled Financing for Fiscal Year 2017-18.  The team also prepared and filed the required calendar year 2018 Senate Bill 165 report with the Board during the December 19 meeting.  In addition, the team completed the parcel tax reports for each CFD pursuant to AB 2109, which now requires additional, more specific reporting as it relates to parcel taxes.  These reports are filed with the State Controller’s Report.  We have also started compiling the information necessary to develop the SB 1029 reports.  These reports are due January 31, 2019, and cover any debt issued between January 1, 2017 and June 30, 2018.  The District has four new eligible land secured debt issuances to be included in this year’s report:  CFD 2003-20 IA D, CFD 201467 IA A and IA B, and CFD 2003-25 IA B; all closed after July 1, 2017 and before June 30, 2018.  All disclosure reports due by December 31, 2018 have also been completed and filed.

 

The detailed quarterly call log (Exhibit F) includes 50 calls received within the fourth quarter.  Callers requested information including:  the maturity date of the CFD, the balance of the tax assessment, the purpose of the charge, and prepayment calculations.

 

The Delinquency Summary Report dated December 10, 2018, reflects the first payment of the Fiscal Year 2018-19 levy, which was due no later than December 10.  The report depicts an overall delinquency percentage of 2.40.  This amount includes only a portion of the first installment payment for Fiscal Year 2018-19.  The delinquency percentage is anticipated to decrease when the remaining payments have been collected and recorded by the County of Riverside.  CFD No. 2015-70 (Maravilla Estates) has a 13.67 percent delinquency rate on this report, which is down from 21.67 percent in the fourth quarter of 2017.  This is largely due to developer owned parcels; we have reached out to the developer regarding payment of their taxes.  Assessment Districts 5, 7, and 8 also have delinquency rates above five percent.  The Financing team will be meeting to discuss options for addressing these delinquency rates.

 

Financial/Strat Plan/Enviro

FINANCIAL IMPACT:

None

 

STRATEGIC PLANNING GOAL/OBJECTIVE:

Financial Stability: Enhance and maintain the District’s strong financial position and credit quality by identifying and implementing specific opportunities to improve underlying financial metrics.

 

ENVIRONMENTAL IMPACT:

None

Recommendation

Receive and file

Meeting History

Feb 5, 2019 4:00 PM  Board Administrative Committee Regular Meeting
draft Draft
RESULT:REVIEWED AT COMMITTEE
Feb 20, 2019 9:00 AM  Board of Directors Regular Meeting
draft Draft
RESULT:RECEIVED AND FILED [4 TO 0]
MOVER:Philip E. Paule, Vice President
SECONDER:Stephen J. Corona, Board Member
YES:Ronald W. Sullivan, Philip E. Paule, Stephen J. Corona, David J. Slawson
ABSENT:Randy A. Record