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HomeMy WebLinkAboutAgenda Statement 1988/07/26 Item 17 . COUNCIL AGENDA STATEMENT . ITEM TITLE: Item ~ /1 Meeting Date '"1fi9f88- 7/ ZJr, I f'y Ordinance c2J75'_ Amending Chapter 5.46 of the Chula Vista Municipal Code by adding thereto a new Section 5.46.020 relating to Disclosure of Mello-Roos Districts, Assessment Districts and Open Space Districts SECOND READING AND ADOPTION SUBMITTED BY: City Attorney (4/5ths Vote: Yes___No~) The proposed ordinance would require increased disclosure of Mello-Roos districts, assessment districts and open space districts upon the sale of a new home. It would also provide buyers with notice of an opportunity to pay off costs associated with these districts at the time of purchase of the property. RECOMMENDATION: Place ordinance on first reading BOARDS/COMMISSIONS RECOMMENDATION: N/A eISCUSSION: At its May 17, 1988 meeting, the City Council (Nader) requested a report on whether disclosure forms could be improved for Me IIo-Roos Assessment Districts. Council indicated that it felt the current forms were good, but probably could and should be improved further. Council directed that the City Attorney's Office obtain input from the school districts and developers in formulating any recommendations in this regard. Pursuant to this direction, I discussed this matter with Andy Campbell of the Sweetwater Union High School District, John Linn of the Chula Vista Elementary School District, Bob Santos from EastLake and Ken Baumgartner from McMillin Development. Everyone was supportive of any proposal which would improve on the current disclosure methods. All of the interested parties have been making their best efforts to come up with a model disclosure system. This is clearly evident from a review of the current disclosure forms which are attached as Exhibits A (EastLake' s forms) and B (McMillin's forms). The Veterans Administration has told EastLake that its disclosure package should be used as a model. One improvement, which has been discussed and will be recommended to the Council by this report, is that potential buyers be presented with a disclosure form which would present them with a choice between paying: (1) an amount equal to the purchase price of the house plus the buyout cost of all _sessment districts, and, (2) the normal purchase price of the house with . Agenda Item No. Council Meeting: Page Two ~J1 I 1Ll2A3-8-- 1 Jj..{,! ~~ assessments under a Mello-Roos District and any other assessment districts being paid along with taxes on a yearly basis. This form would include a breakdown of the special taxes and assessments on a yearly basis similar to Form D of the EastLake package. The theory is that the buyer, by being forced to make a conscious decision on this issue, would appreciate the advantages associated with assessment districts and would be less likely to complain later that this somehow constitutes inequitable treatment. There are three main issues involved with disclosure. They are: 1. Should the disclosure requirements be mandatory or voluntary? 2. When should the disclosure take place and if more than once, how many times? 3. What form should the disclosure take, i.e., flyer, brochure, signed agreement, etc. Currently, the effected developers (McMillin and EastLake) are very supportive of any improvements in disclosure of Mello-Roos and assessment districts. We could adopt voluntary guidelines with the expectation of full cooperation. The problem with this approach is that we don't know who the developers will .e in the future. If some are not cooperative, it could result in an nconsistent pattern of disclosure. If this occurred, those people who recei ved no disclosure or a lesser level of disclosure could be expected to show up at Council when they receive their tax bills. For this reason, I recommend mandatory disclosure and the ordinance has been drafted to provide for this. The next issue is when should this disclosure take place. EastLake currently has five different disclosure exhibits, which are given out at different times. Some of the EastLake buyers contended that after waiting in line and after having their name corne up on a list, they were so caught up in the psychology of buying the home, that they could not be held responsible for their agreement to pay the costs of the district. Based on this, it is reasonable to say that the earlier the disclosure takes place, the better. The proposed ordinance would require this disclosure to take place prior to any binding commitment between the buyer and seller to either sell the property to a specific buyer or to buy the property. Currently, both EastLake and McMillin have a form which gives a readily understandable explanation of the Mello-Roos and assessment district costs and why they are necessary. McMillin's form has an exhibit which shows a year by year breakdown of the Mello-Roos costs. The EastLake form is similar, but it also contains an additional breakdown for the City assessment districts and any open space maintenance districts. The form proposed by the ordinance . -. . . ;"/,1 ( rr<I Agenda Item No. ~r\ 1 ~ Council Meeting: ~ 11 ~{, Page Three would incorporate all of these features and would add a section which gives the buyer a choice of either agreeing to the spread of costs pursuant to the Mello-Roos/assessment districts, or, in the alternative, agreeing to pay the "buyout" costs up front along with the purchase price. FISCAL IMPACT: None 4329a . . ,