75B - PH TO ADOPT SCIP - Laserfiche WebLink

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Resolution to Join SCIP October 20, 2020 Page 2 With respect to impact fees, the property owner will either pay the impact fees at the time of permit issuance and will be reimbursed from the SCIP bond proceeds when the SCIP bonds are issued; or the fees will be funded directly from the proceeds of the SCIP bonds. In the former case, the City is required to pay the fees over to SCIP, and in the latter case, SCIP holds the bond proceeds representing the fees. In both cases, the fees are subject to requisition by the City at any time to make authorized fee expenditures. By holding and investing the money until it is spent, SCIP is able to monitor the investment earnings (which come to the City) for federal tax law arbitrage purposes. SCIP encourages the City to spend those amounts before any other fee revenues of the City. If the fees are paid by the property owner and bonds are never issued, the fees are returned to the City by SCIP. In this way, the City is never at risk for the receipt of the impact fees. Since its inception, SCIP has financed approximately $600 million of bonds for local projects. The City's role is minimal and is primarily to adopt a resolution (Attachment 1) to become an official participant in the SCIP program. CSCDA is responsible for preparing the requisite bond financing documents, as well as the ongoing administration of financing for each project. The City is not liable for any debt service on the bonds issued by the CSCDA or the assessments imposed on the participating properties. If the resolution is adopted by the City Council, the SCIP will be available citywide to owners/developers of both residential and commercial projects of a smaller scale. The City is permitted to charge CSCDA a fee to cover its staff costs to review the requisite documents, including the SCIP application and funding request. The benefits to the property owner include: • Only property owners who choose to participate in the program will have assessments imposed on their property. • Instead of paying cash for public capital improvements and/or development impact fees, the property owner receives low-cost, long-term, tax-exempt financing of those fees, freeing up capital for other purposes. • The property owner can choose to pay off the special assessments at any time. Because SCIP is a fixed lien, assessment payments will not escalate over time and no property owner is in any way responsible for another property's assessment. • For homebuyers, paying for the costs of public infrastructure through a special assessment is superior to having those costs "rolled" into the cost of the home. Although the tax bill is higher, the amount of the mortgage is smaller. Moreover, because the special assessment financing is at tax-exempt rates, it can come at a lower cost than mortgage rates. • Owners of smaller projects, both residential and commercial, can have access to tax- exempt financing of infrastructure. • Before the inception of SCIP, only projects large enough to justify the formation of an assessment or communities facilities district had access to tax-exempt financing. SCIP can finance project amounts as low as $500,000. The benefits to the City include: As in conventional assessment financing, the City is not liable to repay the bonds issued by CSCDA or the assessments imposed on the participating properties. 75B-2