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375 STUDY SESSION (continued) Om" the funds start to accumulate, could a future Council elect not to use those funds for the construction of public facilities within the District, or elect to use those funds for some other purpose, or to reduce debt service on outstanding debt, ilftwM as opposed to new facilities? City Attorney Schricker Fesponded that a special fund can be created by legislation which would direct the administering of funds as a segregated special fund; that there are no guarantees in a legal sense that might encumber the use of those funds because it is a legislative, discretionary matter as to what future Councils may want to do. With respect to funds already collected, there might be some issue arise as to the diversion or other use at a later time, than that specified at the time when they were collected. Any legislation is dynamic and can be changed in the future, unless some kind of vested right were to accrue, and future Councils could change the legislation. Mr. Fales added that compilation of a legislative history would assure that future Councils would be constrained by that actual expenditure history from using those funds for anything other than for what they were first intended. He also noted that what must be kept in mind is that the purpose of imposing the facilities charge is to build facilities, not pay off bonds. If you use the facilities charge to pay off bonds, then you have to raise the facilities charge to pay for both debt service and the future facilities. Mr. Wells also emphasized the point that the facilities charge is to avoid bonds, and the representations to the bond purchaser would be that the amount of future bonds to be issued that would share that tax base with them will be reduced because you have a facilities charge which improves the creditability of the issue that he is buying. But he added that was not the type of control that they would encourage. He indicated that he believed that what Redwood Shores, Inc. is asking is estab- lishment of a review policy so that both the owners of unimproved land and those owners of developed land can participate in a process that puts this into focus on a periodic basis to allow for correction, and that they would encourage such a policy. Mr. Warren responded to question by Council regarding a concern in his letter re- lating to the size of the proposed facilities charge and whether it would encompass all City fees or be in addition to them; that it would add substantially to the costs to a developer and suggested it might be a deterrent to investment in the District. He suggested more investigation is needed as to the level of fee, the rate of escalation, and the flexibility to deal with particular situations in the event a major commercial entity, for instance, wanted to come to Redwood City. (Council recessed from 11:00 a.m. to 11:05 a.m.) Ron MacQuarrie, Chairman, GID 1-64 Advisory Committee, referred to the Committee report of October 10, 1980, noted the several meetings of the Committee, and ad- vised that the concept of a facilities charge is one the Committee would approve without question, but the schedules need to be refined, and schedules would need to be adopted that would be justifiable from a commercial industrial standpoint; a separate funding basis should be looked at for residential, particularly whether a resident may have to pay a .high fee in order to add on a few hundred square feet to his house at some future time. He suggested that it would seem reasonable that any future bonding could occur as a subdistrict (South Shores), with the excess revenues generated on the Peninsula being applied to initial development in South Shores, stating this would alleviate a lot of the concerns they have. During the brief discussion which followed, Mr. Fales noted that the proposal is that a facilities charge would be applicable only to new construction and not additions. Mayor Biagi announced that due to time constraints and because of another commit- ment at noon, the Council should proceed to Item 2 relating to Parkwood 101. He noted that sufficient questions have been raised in this meeting to justify scheduling of another meeting on the subject of a financing plan. Adj.Reg.Mtg. mem 10/11/80 Page 7 kayo