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374 STUDY SESSION (continued) Mr. Wells also noted that from the point of view of a homeowner, there is a tendency to believe that the rights of the existing occupants of developed structures are the only rights that exist in this project, and that is not true. In projects ,, like this, the undeveloped land may have rights of its own because it lent its credit to allow the people who live there to build, and have the advantage of the improvements that went in under each of the previous six bond issues, so that right now, there is a "window of time" in which development there can take advantage of the excess capacities in water and sewer and streets. He believed that the Council should take advantage of that window of time, collect the facilities charges from those building the units prior to the time the next wave of improvements are needed, and use those funds to defer and to minimize the amount of bonds that are going to be sold and that would be imposed on all taxable land. Discussion followed and City Manager Fales and City Attorney Schricker commented and replied to questions regarding the fact that sufficient flexibility could be built into the legislation to allow for a facilities charge to pay bond service on previously issued bonds and that Council can establish the priorities in its legis- lation; that whether a facilities charge could be applied to serve debt for prior built facilities it probably would be necessary to make a finding that the charge will produce benefit to the person it is imposed upon or to his improvements. That would have to be looked at very closely with respect to the meaning of the improvements, because where there already are some funded improvements, then the question is, should that be double-funded, or is it a proper public purpose to impose a charge on new development to reduce prior debt. Mr. Wells responded to a question by Council regarding assessment financing by advising that it would be impractical for major capital improvements. Regarding use of facilities charges to pay old bond service and/or new bond service, he pointed out that the purpose of the facilities charge is to defer and to minimize the amount of bond sales, and that he would encourage any future policy actions to anticipate building a fund out of these facilities charges, let them escalate, and use them to avoid the use of bonds until the land becomes ready to market. Council discussion continued regarding the suggested supplemental chart and that as an incentive for the present District electors to pass a facilities charge it would be beneficial to determine what the possible assessed valuation will be be- tween now and 1985, show what the reduction in the present residents' taxes will be and the effect if new bonds are issued. For clarification, Mr. Fales stated his understanding of the Council's request: to take what is estimated to be built, whether commercial, office space or housing between now and 1985, translate those units into estimated values and apply that to the debt service that would be re- quired on existing bonds until such time as new bonds may be issued, and what would happen to a series of examples in terms of a tax on an individual dwelling unit. Council acknowledged that was correct. Discussion continued regarding the recommendation for a facilities charge, and Mr. Wells noted that a study by the League of California Cities indicates the charge is quite moderate compared to some other cities. Implementation of the charge would occur at the time the building is occupied, so it helps to avoid heavy front money concerns for ongoing growth. Mr. Fales added that approximately 90% of the cities in California have a facilities charge of one kind or another, and it does not appear to impede growth in any of those communities. He affirmed that the recommendation basically is to impose a facilities charge, and if that facilities charge is high enough it is theoretically possible that enough of a fund could be built up so as not to have to issue bonds at all, and the higher the facilities charge, assuming development continued as estimated, the lower the amount needed for bonds to offset the deficit. Don Warren, 350 Marine World Parkway, representing Redwood Shores, Inc., referred to his letter of October 1, 1980 on the subject of the Bartle Wells report and their two concerns: 1) in the event that the City imposes a facilities charge, what controls are available to the City to assure that any funds collected by that charge will in the future be utilized totally within the District?, and 2) when Adj.Reg.Mtg. ! 10/11/80 Page 6