In a 3-2 vote—with Mayor Ignacio Velazquez and Councilman Ray Friend voting ‘nay,’—the Hollister City Council passed a resolution May 15 that forms a Community Facilities District to finance certain public improvements and development impact fees associated with the 118-acre site known as the West of Fairview project.
The action authorizes California Statewide Communities Development Authority (CSCDA) to form the district.
During the council meeting on April 17, Velazquez and City Attorney Brad Sullivan clashed over moving forward with the project that has languished for the past 18 years, as if in development purgatory. It was delayed a bit longer when the mayor requested a second opinion concerning the development agreement from that of Sullivan.
Bryan Swanson, director of the Hollister Planning Department, said the Award Homes project was important to Hollister. There are plans for 577 single-family homes, 100 multi-family homes, and a 4.5-acre park. He said that beginning in 2018, the project is expected to have an eight-year absorption rate and the city has agreed to cooperate by forming the CFD to finance improvements.
Swanson said city attorney Soren Diaz (Sullivan has since moved out of the area), and Mike Whipple, a consultant for the city, would address Velazquez’s request for a second opinion. Diaz said an outside law firm read the development agreement and upheld Sullivan’s opinion regarding duties and responsibilities of the city to cooperate in the event that Award Homes decided to petition for a CFD, which is the right they have under the agreement.
“That, in a nutshell, is the opinion,” he said.
The mayor thanked him and had nothing to say during the rest of the discussion. Then, David Rubcic, Hollister's interim engineer, said the CFD will allow Award Homes to finance infrastructure improvements totaling $16.5 million during the first two phases of the project. He said the resolution would direct the staff to work with Award Homes to enter into developing the CFD.
Councilman Karson Klauer wanted to know who wrote the CFD agreement because he thought it was not an easy read and alluded to the city being tripped up on something that was easy to understand in the original development agreement written more than 15 years ago.
“I want everyone to be aware of what’s going on in this one and who decided on the language,” he said. “I have an issue with a simple section. Who wrote it? Is it boilerplate? Is it the standard one this company (Award Homes) uses for the CFD?”
Whipple said he supposed Klauer was referring to the part of the agreement concerning forming a Joint Facilities Agreement. He said James Hamill, executive director of CSCDA, provided the language and that it was a standard document. He said, however, that the city council could make any amendments it wants.
Being new to the council, Councilman Jim Gillio asked how long the project had been in development. City Manager Bill Avera told him that the original development agreement was approved in 1992, and had been amended a number of times over the years. Gillio recalled that on May 1, when he was sworn in, it had been asked if there were any more, similar CFD agreements in the pipeline. Avera said the West of Fairview development agreement was the only one the city has that is a “true development agreement.” He said there is a performance agreement with another developer that does not involve any special financing as CFDs do. Gillio asked again if Avera could assure the council that there would be no more such projects. Avera backtracked a bit by stating that the council did allow the use of Statewide Community Infrastructure Program financing for commercial and industrial projects when appropriate.
Klauer returned to the section of the agreement that was of concern to him.
“This may seem a little petty, but it reads that this is the best thing for the citizens and customers of Hollister and I don’t believe that,” he said. “If this is going forward, that’s got to be taken out of there.”
Gillio brought up a concern stated in the past by the mayor about his concern that successive buyers of the homes in the subdivision over the years might not understand the significance of the papers they signed that resulted in additional taxes. He said he would like to see language in the agreement that would make it clearer. Whipple suggested that potential buyers could download information from websites on other CFDs concerning special taxes. Klauer asked attorney Diaz if he was satisfied with the language in the agreement. Diaz said he was and that it met the standard requirements used in such agreements. Klauer also wanted to know if Rubcic was OK with the language because he would be heavily involved in the process. Rubcic signed off on it as well.
Hollister resident Marty Richman brought up a topic not addressed before, which he called “use it or lose it,” explaining that there should be a provision in any development agreement that the developer had only so many years to move on a project or they would lose it.
“This project was started in 1992, and we’re sitting here in 2017, and it’s a different world financially, legally, who has what responsibilities, who gets sued,” he said. “We’re foolish to keep signing agreements that may not come to fruition for 15 years. We’re foolish for two reasons: The world changes and that agreement is locked in stone. If it’s a disadvantage to the developer they just walk away, but if it’s a disadvantage to the city they’re going to implement it.”
Richman said that if the provision is not added to future agreements, there will be, as there has been, years of stagnation with nothing being built followed by a glut of construction.
“Then it’s impossible to catch up on the impact and mitigation fees,” he said. “And even if you do catch up, you don’t have the years’ of experience of how those impacts work. Impact theory is one thing; impact fact is another.”
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