Adopt resolution setting a public hearing on June 25, 2024 to consider increasing the Community Facilities District (CFD 1989-1) special tax to fund facilities and services for the Mary L. Stephens and Walnut Park Davis Branch Libraries, revising the Rate and Method of Apportionment, and authorizing additional facilities and services for these libraries. (No general fund impact) (Lopez/Beales)

Adopt resolution setting a public hearing on June 25, 2024 to consider increasing the Community Facilities District (CFD 1989-1) special tax to fund facilities and services for the Mary L. Stephens and Walnut Park Davis Branch Libraries, revising the Rate and Method of Apportionment, and authorizing additional facilities and services for these libraries. 

A community facilities district created pursuant to the Mello-Roos Community Facilities Act of 1982 (Gov. Code 53311 et seq., "Mello-Roos Act") provides a means for financing certain public facilities and services, such as libraries, through incurring bonded indebtedness and levying of special parcel taxes.  Community Facilities District No. 1989-1 ("CFD") was created by the Board of Supervisors in 1989 pursuant to the Mello-Roos Act to levy a special tax to fund library services and facilities in Davis, including repayment of bonds issued to fund improvements to the Davis Branch Library (now the Mary L. Stephens Library - Davis Branch). The formation of the CFD in 1989 authorized up to $4.1 million in bonded indebtedness and the special parcel tax was levied at the rate of $42 per year for single-family residences with no inflationary adjustment. The CFD's boundaries encompass the City of Davis and the Davis Joint Unified School District and have not been changed since its formation (see boundary map - Attachment A). 

In 2007, Davis voters approved Measure P, which increased the amount of the annual CFD special tax, authorized an additional $7.5 million in bonded indebtedness, updated the rate and method of apportionment, and revised the library facilities and services to be funded by the special tax.  Specifically, Measure P increased the special tax for FY 08/09 from $42 to $88 for single-family residential parcels within the CFD (and $44 per residential unit for multi-family residential parcels) and also authorized a 2.0% per year increase to the special tax rate. The special tax rate is set by the Board of Supervisors each year consistent with Measure P. The CFD 1989-1 special tax rate for FY 24/25 is $120.80 for single-family residential parcels and $60.39 per residential unit for multi-family residential parcels (Resolution No. 24-19). The proceeds of this special tax are being used to pay for the cost of additional bonds issued for the purpose of expanding and renovating the Mary L. Stephens Davis Branch Library, as well as providing additional funds for library services within the CFD.

The CFD bonds have been refunded periodically with the latest occurring in 2015 to obtain lower interest rates (see Resolution No. 15-114).  The 2015 bond refunding did not result in any additional debt nor extend the time for repayment of the special tax bonds.  The final bond payment is due in December 2037 (FY 37/38).  The current principal balance of the special tax bonds is approximately $3.97 million. 

In October 2022, the County received an award from the California State Library for $8,783,400 toward the construction of a new library facility in South Davis.  On February 21, 2023, the Board of Supervisors voted to authorize the County Administrator to execute the grant agreement.  The Board of Supervisors subsequently approved a project budget with funding sources consisting of grant funds, accumulated special tax proceeds, development impact fees, capital improvement reserves, and a contribution from the City of Davis.  Additionally, the City of Davis received $850,0000 in federal funding to be used toward construction of the new library.  County staff have been working with WMB Architects to design a new library to be located in Walnut Park in South Davis, which is currently known as the Walnut Park Library.

The Walnut Park Library will reduce capacity issues at the Mary L. Stephens Davis Branch Library, expand services to a growing Davis community, and provide access for those who have difficulty traveling to the Mary L. Stephens Library in North Davis.  However, having a second library in Davis will generate additional operations and maintenance costs beginning in late 2026, when the new library is projected to open. Additionally, the current special tax, including its 2% annual inflation rate, is not projected to keep up with the costs of the Mary L. Stephens Davis Branch Library, particularly with the rising cost of salaries and benefits for staff and remaining bond debt service.  Increasing the special tax will allow the County to operate and maintain the existing Mary L. Stephens Davis Branch Library as well as the new Walnut Park Library, but will not authorize additional bonded indebtedness.  The November 2024 ballot will request voters to approve increasing the current special tax by $49 per parcel (multifamily parcels would pay $24.50 more per unit) beginning in FY 25-26, with an increase of up to 2% per year for inflation, along with related changes to the approved services and facilities that may be funded by the special tax and the Rate and Method of Apportionment (RMA) of the special tax.  The RMA defines the methodology used to calculate the special tax, sets the maximum tax allowed, defines exempt properties, and provides the road map for administration of the CFD.

The resolution of consideration (Attachment B) is the first step in seeking required voter approval to increase the special tax and revise the authorized services and facilities for the Davis Branch Libraries pursuant to the Mello-Roos Act.  The resolution defines the proposed new authorizations for the levying and expenditure of the CFD 1989-1 special tax and sets the new special tax rate. In addition, the resolution sets a required public hearing on the proposal for June 25, 2024.  The public hearing must be set at least 30 days, but no more than 60 days, from the adoption of the resolution of consideration setting the public hearing.  

At the conclusion of the public hearing on June 25, 2024, the Board will have the discretion to either abandon the proceedings or to proceed with the special tax measure. If the Board elects to proceed with the proposed changes to CFD 1989-1, the Board will adopt resolutions to submit a ballot measure to the registered voters within the CFD at the general election on November 5, 2024. Because the proposed actions include increasing the special tax, a two-thirds vote or more is required for the measure for the ballot measure to pass.

A summary of the key aspects of the additional facilities and services to be funded by the CFD special tax and the revised RMA have been prepared by SCI Consulting and are included as Exhibits A-1 and C-1, respectively, to the resolution (Attachment B). The exhibit designations follow the designations in the prior CFD formation and change resolutions (Resolution Nos. 89-101 and 07-65) to clearly track the particular CFD changes being proposed.

The County Administrator's Office, County Counsel, County General Services Department, SCI Consulting Group, the South Davis Ad Hoc Committee, and Library staff have been involved in developing the recommendation and resolution before you today.