Randy - Vallco Initiative and Community Facilities Districts

From: Randy Shingai
Date: Sun, May 29, 2016 at 9:32 AM
Subject: Vallco Initiative and Community Facilities Districts.
To: City Attorney's Office <CityAttorney@cupertino.org>, City Council <citycouncil@cupertino.org>, David Brandt <Davidb@cupertino.org>

Dear City Manager, City Attorney, and City Council.

Section 9.7 of the Vallco Initiative (on page C-207)  states that the developer will make use of one or more "Community Facilities Districts", or CFDs, to secure financing.  CFDs are made possible by the Mello-Roos Act, that was created to finance public works.  My understanding of the Initiative text is that the developer plans to use provisions of Mello-Roos to obtain tax-exempt financing for the "green roof" and more.  This seems to be a gross perversion of the intent of Mello-Roos, but I will leave that for another time.

I asking that the following be covered in the 9212 Report for the Vallco Initiative.

1. Is the City required to create one or more CFDs as specified by the Vallco Initiative if the initiative passes?

2. Who pays for the formation of these CFDs?

3, Once created, how much control will the City be able to exert over these CFDs?

4. How much control will the City be able to exert over the terms of financing that these CFDs utilize?

• What about recourse in the event of default.  What is the exposure to the City?
• A quick scan of the assessed values for parcels in the Vallco Plan Area have parcels with an assessed value of anywhere from $80 to $78 million.  Since special taxes levied by CFDs cannot be "ad valorem", there could easily be situations where the taxes levied on a parcel could exceed its market value.  I have read estimates that the "green roof" will cost as much as $300 million, so the special taxes levied will be significant.  How can this be mitigated?
• What about future parcelization that the Initiative says is likely (See C-199)?  How will affect the distribution of special taxes assigned to individual parcels.  If parcels are dedicated to the City, will that affect the distribution of special taxes levied to remaining privately owned parcels?

Thanks for your consideration,

Randy Shingai

From: Randy Shingai <randyshingai@gmail.com>
Date: Mon, May 30, 2016 at 1:04 PM
Subject: Re: Vallco Initiative and Community Facilities Districts.
To: City Attorney's Office <CityAttorney@cupertino.org>, City Council <citycouncil@cupertino.org>, David Brandt <Davidb@cupertino.org>

The State Treasurer keeps a list of troubled Mello-Roos Community Facilities Districts.  These include districts that have either defaulted or are nearing default.

http://www.treasurer.ca.gov/cdiac/default-draw/issuename.asp

I would like the 9212 Report to have an analysis on on the default risks and the alternatives for structuring debt and debt service to minimize that risk for the Vallco Initiative's plan for the use of Community Facilities District.

I would also like a characterization of the exposure to the City of Cupertino  for a default of the Community Facilities District(s) that the Vallco Initiative plans to use to finance Vallco.

Thank you,

Randy Shingai